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Stock Market Today:

Stock Market Today: February 28, 2013

After The Close - The U.S. stock market put in a mixed session today. While the major averages made progress through much of the afternoon, most of the gains evaporated in the last hour. This likely suggests that traders have become fatigued, and that the market may consolidate further. At the close of the session, the Dow Jones Industrial Average was off 21 points; the S&P 500 Index was off a point; and the tech-heavy NASDAQ was off two points. In the final analysis, market breadth was uninspiring. There was leadership in the consumer cyclical, transportation, and healthcare names. In contrast, there was some weakness in the basic materials issues.

Technically, the S&P 500 Index remains above the key 1,500 level. Moreover, the Dow has managed to hold near all-time high ground. However, it should be noted that trading volumes have not been particularly heavy lately, suggesting some hesitancy among traders. The VIX was slightly higher today, at about 15.50.

Some stocks made headlines today, even though the fourth-quarter earnings season is now largely over. To wit, we heard from a number of retailers. Specifically, J.C. Penny (JCP) shares sank, after the struggling company issued a weak fourth-quarter report. In addition, Kohl’s (KSS) put out a decent quarterly release, but investors were unhappy with the outlook sending that stock mildly lower. Also, Groupon (GRPN) stock was off on a disappointing report.

Overall, today’s economic news was constructive. The employment situation continues to get better. Notably, the weekly initial jobless claims moved lower, and are now below the widely-watched 350,000 level. Also, there was some improvement in the continuing claims figures. Elsewhere, the second estimate of GDP for the fourth quarter showed a nominal 0.1% advance. Although this was better than the previous estimate, it still suggests that the economy has been very sluggish over the past few months. Nonetheless, certain key regions seem to be on the mend. Also, the Chicago PMI came in at 56.8 for February, which was better than expected.

Tomorrow, we get a look at personal income and spending for January, as well as the final February figures for the University of Michigan’s consumer sentiment index. Reports on construction spending, along with monthly auto and truck sales, are also due out. Finally, the ISM report on manufacturing (a key release) will be issued at 10:00 AM (EST). - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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12:25 PM EST - Most stocks are higher today, although that is not translating into much of a showing on either the Dow Jones Industrial Average or the NASDAQ. Just past the noon hour on the East Coast, the Dow is up eight points and the NASDAQ is in the plus column by seven points. But the broader market is showing greater strength, with five stocks advancing for every four declining on the New York Stock Exchange.

To some extent, Wall Street is still digesting the big gains registered over the past two days. Monday’s selloff, on unsettling news out of Europe, created a buying opportunity for investors who were waiting for a pullback.

Then, too, today’s business news did not completely live up to expectations, with revised fourth-quarter GDP barely turning positive after the initial reading showed a bit of backsliding. The bulls would no doubt have a better chance at taking a run at an all-time high on the Dow—which it is within striking distance of—if the GDP figure had come in as strong as, or better than, expected.

Another sobering thought is that more government cutbacks are on the way, beginning tomorrow, assuming Congress and the White House don’t come to an agreement to lessen the sting of previously agreed upon belt-tightening measures. A big drop in government spending, largely for the Defense Department, was one of the main reasons for the economy’s poorest showing in two years at the end of 2012.

This morning’s other economic data offered more encouragement, though, with weekly initial jobless claims falling 22,000, from a revised 366,000, according to the Labor Department and the Chicago PMI (purchasing managers’ index) coming in at its highest level in 11 months.

In corporate news, shares of Continental Resources (CLR) are enjoying a banner day after the North Dakota oil driller’s earnings topped analysts’ forecasts by a wide margin.

On the down side, shares of J.C. Penney (JCP) are reeling after the retailer reported a large drop in sales. Investors are also giving Cablevision (CVC) a thumbs down following word that it is losing subscribers.

Heading into afternoon trading on the final day of February, the market’s tone is one of modest optimism, perhaps on the thinking that the politicians in Washington will come up with a last-minute way to avoid fast-approaching spending reductions. But the weaker-than-projected GDP revision may keep the gains in check. -Robert Mitkowski

At the time this article was written, the author did not have positions in any of the companies mentioned.

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Stocks to Watch from The Survey – Earnings reports from retailers, many of which have fiscal years that end in January, continue to roll in. Thus far today, the biggest disappointment appears to be department store operator J.C. Penney (JCP), which reported dismal January-period results, causing its shares to plunge in pre-market trading. Other retail stocks indicating lower openings on earnings news include Limited Brands (LTD), the parent of Victoria’s Secret, value-oriented big-box retailer Kohl’s (KSS), and women’s apparel and accessories company Chico’s FAS (CHS). On the bright side, the stock of Sears Holdings (SHLD) is up ahead of the bell, as investors seem pleased with January-quarter results from the mid-priced retailer. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - The Wall Street bulls are proving to be increasingly adept at taking a punch. So, following back-to-back sharp declines in the equity markets to end last week and start the current five-day stretch, the bulls have righted themselves in a hurry and in a big way. In fact, yesterday saw the second consecutive triple-digit advance by the Dow Jones Industrial Average, with that 30-stock composite rising by 176 points, to yet another five-year high. In the process, the Dow is now within some 90 points of breaking the all-time record set during the ballyhoo days of late 2007.

Meanwhile, the reasons for the recent two-day reversal have been just partly resolved. To wit, fears that the Federal Reserve will soon abandon its monetary easing ways, which had been speculated upon in a reading of the minutes from the last FOMC meeting, was more or less dashed by comments from Fed Chairman Ben S. Bernanke over the past 48 hours. Specifically, he again promised to keep the downward pressure on long-term interest rates so long as the nation's jobless rate remained elevated. By that he means above 6.5%.

However, the other vexing issue, the financial problems in the euro zone, and most notably the electoral uncertainty in Italy, one of the less financially healthy members of that loose economic confederation, are still with us. Europe remains a problem that is unlikely to soon go away. However, we have climbed by several thousand points in the Dow and spiked similarly in some other indexes while the Continent has remained encumbered with an assortment of economic and financial ills.

Now, the markets are faced with yet one more challenge, namely the so-called sequestrations, which are set to kick in tomorrow, unless the two sides in Washington can structure a last-minute accord. But that looks less and less likely as we near the deadline for such a deal. These automatic spending cuts, in fact, seem all but avoidable, as the President and Congressional Republicans are first set to meet tomorrow to discuss a way to keep such reductions at bay, thus tacitly acknowledging that the deadline for implementing those cuts will pass without a deal.

Encouragingly for the stock market, there seems to be little panic afoot as the sequestrations loom, with many reasoning that they will not be in place long enough to exact a material toll on the economy. In fact, some speculate that the cuts are small enough, as a percentage of the aggregate budget and GDP, that they will not take much of a bite out of the economy. We shall see.

Meanwhile, in other news, ailing retailer JCPenney (JCP) has released quarterly results and they showed the company posting a wider-than-expected quarterly loss. That stock, already depressed, is tumbling in the pre-market indicating an opening at $17.50 a share, which is well below yesterday's close of $21.16, which already was off some 50% from the 52-week high of $41.65 a share.

Finally, the Commerce Department has just reported revised fourth-quarter data on the nation's gross domestic product, showing that the economy, initially estimated to have contracted by 0.1% in the recently ended three months, instead expanded by that token amount. However, the slight uptick was well below expectations, which had been for a growth rate of some 0.5%. But that disappointment has not dampened the bullish appetite for equities, as the futures remain modestly in the plus column, having retained that edge following the issuance of the dispiriting GDP report. – Harvey S. Katz

At the time of this article's writing, the author did not have positions in any of the companies mentioned.

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